S&P 500 up for 7th week; Dow down for 2nd

S&P 500 is up over 6% this year; some fear a correction is coming

PolyaLesova

SAN FRANCISCO (MarketWatch) — The S&P 500 Index finished Friday with its seventh consecutive week of gains as a choppy trading day was buffeted by worries of weak retail sales and supported by positive economic data.

The S&P 500 index
SPX, -0.38%
fell 1.59 points, or 0.1%, to close at 1,519.79, with telecom the best gainer and energy the biggest decliner among its 10 major industry groups. The index, however, rose 0.1% for the week, extending a seven-week winning streak not seen since January 2011.

U.S. stocks hit their lows of the day in afternoon trading following a Bloomberg News report that a Wal-Mart Stores Inc.
WMT, +0.31%
executive called the retailer’s February sales “a total disaster” in an internal email. Read more on Wal-Mart exec's email.

The Dow Jones Industrial Average
DJIA, -0.52%
rose 8.37 points, or less than 0.1%, to close at 13,981.76. That comeback wasn’t enough to save the Dow for the week as it logged its second week of losses in a row, with a 0.1% decline.

Wal-Mart shares, which closed down 2.2%, dragged on the Dow. The nation’s largest retailer is scheduled to report fourth-quarter earnings February 21. Consumer spending, as evidenced by earnings reports from other retail-focused companies, has been a relative bright spot in the slow-going economic recovery.

Randy Hargrove, a spokesperson for Wal-Mart, told MarketWatch that “as with any organization, we often see internal communications that are not entirely accurate, that lack the proper context and represent individual opinions.”

While the Wal-Mart report dinged markets, investors started to shrug it off as trading wound down, said Robert Pavlik, chief market strategist at Banyan Partners.

“They took it with a grain of salt,” Pavlik said, noting that some market watchers think Wal-Mart doesn’t portray an accurate picture of wider retail sales. Even so, the expiration of a payroll tax holiday that took effect in January still weighs upon consumer spending expectations, he said. Read more on how payroll tax hike hit January retail sales.

The Nasdaq Composite Index
COMP, -0.44%
dropped 6.63 points, or 0.2%, to close at 3,192.03, after hitting a fresh 12-year high of 3,206.21 earlier in the session. For the week, the Nasdaq fell 0.1% to snap its six-week winning streak.

Until the Wal-Mart news, no one catalyst had been driving the market, which had to bobbed and weaved in anticipation of a correction. With the S&P 500 up nearly 7% for the year to date, investors are suspect buying at these levels, Pavlik said.

“Markets are overbought,” he said. “There’s concern about the sequester. People don’t want to be the last ones to the party; they want to see the market give back a little.”

Week ahead: Sequester looms

(2:36)

Next week brings reports on housing and consumer prices, but the spotlight may be dominated by the approaching March 1 spending cuts known as the sequester.

Declining stocks outnumbered advancers by about 15 to 14 on the New York Stock Exchange, and about 12 to 11 on the Nasdaq. Composite volume for NYSE-listed stocks topped 3.8 billion shares, and topped 1.8 billion for Nasdaq-listed stocks.

The three major U.S. stock indexes had been in positive territory earlier after the University of Michigan-Thomson Reuters consumer-sentiment gauge rose to a preliminary February reading of 76.3 — the highest level since November — from a final January reading of 73.8. Read more on consumer sentiment.

Also, the New York Federal Reserve Bank reported before the market open that the Empire State manufacturing index moved into positive territory in February for the first time since July. See: Manufacturing improves in New York.

Separately, industrial production slipped 0.1% in January after the Federal Reserve found the final two months of last year were stronger than initially estimated.Read more on industrial output.

Reuters

G-20 officials meet with Russian President Vladimir Putin in the Kremlin on Friday.

Investors are also watching a G-20 meeting in Moscow. The Wall Street Journal said G-20 officials will pledge to make sure that monetary policy is focused on price stability and growth, rather than weakening their respective currencies, according to the draft of a statement they intend to release Saturday.

U.S. investors will also heed to any developments in the effort to head off looming sharp cuts to defense and domestic spending.

Senate Democrats on Thursday offered a plan that would come up with half of the $110 billion needed to prevent the sharp cuts — known as the sequester — through new revenue, and half through spending cuts.

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